Carbon Conservation VER audit 08
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Carbon Conservation VER audit 08

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Validation by: SmartWood Program of the Validation SmartWood Headquarters 65 Millet St. Suite 201 Audit Report Richmond, VT 05477 USA For: Tel: 802-434-5491 Fax: 802-434-3116 www.smartwood.org Provincial Government of Nanggroe Aceh Darussalam - Fauna & Flora International - Carbon Conservation in Ulu Masen Ecosystem, (Aceh Province, Indonesia) Audit Standard: Climate, Community and Validation Audit Managed by: Biodiversity Project Design Standards (Climate, SmartWood Asia Pacific Regional Office Community and Biodiversity Alliance) - Jl. Ciung Wanara no. 1x, Lingkungan First Edition, May 2005 Kertasari, Kelurahan Panjer, Denpasar Selatan 80225 Bali, Indonesia Tel: +62 361 224 356 Audit Dates: November 27 - Fax: +62 361 235 875 Contact person: Jeffrey Hayward December 2, 2007 Email: jhayward@ra.org Audit Team: Jeffrey Hayward, Suraya Afiff Report Finalized: January 17, 2008 Validation statement Issue date: February 6, 2008 Validation validity period: February 6, 2008 to February 5, 2013 Ver-29 Nov 2007 Validation code: SW-VER-0015 Validation Audit report Page 1 of 55 17 January 2008 TABLE OF CONTENTS TABLE OF CONTENTS............................................................................................................................ 2 1. VALIDATION AUDIT FINDINGS AND CONCLUSIONS..................................................... ...

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  Validation by: SmartWood Program of the     SmartWood Headquarters 65 Millet St. Suite 201 Richmond, VT 05477 USA Tel: 802-434-5491 Fax: 802-434-3116 www.smartwood.org                   Validation Audit Managed by:  SmartWood Asia Pacific Regional Office Jl. Ciung Wanara no. 1x, Lingkungan Kertasari, Kelurahan Panjer, Denpasar Selatan 80225 Bali, Indonesia Tel: +62 361 224 356 Fax: +62 361 235 875 Contact person: Jeffrey Hayward Email: jhayward@ra.org                  Ver-29 Nov 2007 Validation Audit report
        
Validation Audit Report For: Provincial Government of Nanggroe Aceh Darussalam -Fauna & Flora International -Carbon Conservation in Ulu Masen Ecosystem, (Aceh Province, Indonesia)
Audit Standard:Climate, Community and Biodiversity Project Design Standards (Climate, Community and Biodiversity Alliance) -First Edition, May 2005  Audit Dates:November 27 -December 2, 2007 Audit Team: Jeffrey Hayward, Suraya Afiff Report Finalized:January 17, 2008  Validation statement Issue date:February 6, 2008 Validation validity period:     February 6, 2008 to February 5, 2013 Validation code:SW-VER-0015 a  2008 17 Januare 1 of 55
    TABLE OF CONTENTS  TABLE OF CONTENTS............................................................................................................................ 2 1. VALIDATION AUDIT FINDINGS AND CONCLUSIONS............................................................ 3 1.1. VALIDATIONAUDITSCOPE.......................................................................................................... 3 1.2. AUDIT FINDINGS........................................................................................................................... 3 1.2.1 Analysis of Conformance with Standard ............................................................................. 3 1.2.2 Corrective Action Requests and Observations ................................................................... 6 1.2.3 Other Audit findings ........................................................................................................... 10 1.3. CONCLUSIONS........................................................................................................................... 10 2. VALIDATION AUDIT PROCESS.................................................................................................. 11 2.1. AUDIT TEAM AND QUALIFICATIONS........................................................................................... 12 2.2. AUDITMETHODOLOGY ANDSCHEDULE................................................................................... 13 2.3. DOCUMENTS REVIEWED............................................................................................................ 14 2.4. STAKEHOLDER CONSULTATION PROCESS(IF APPLICABLE).................................................... 16 APPENDIX I: SmartWood System for Conformance Evaluation (public)............................... 17 APPENDIX II: Standard conformance checklist (public)............................................................. 18 APPENDIX III: Stakeholder lists (public)......................................................................................... 55             
  
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1. VALIDATION AUDIT FINDINGS AND CONCLUSIONS 1.1. Validation Audit Scope  Pro ect Pro onent sProvince of Aceh, Fauna and Flora International, Carbon name:Conservation Pty Ltd. T e of or anization s / Carbon forest project consortia between government, Project Proponents: environmental NGO, and carbon project developer. Contact person, Title: John O. Niles Address: 1226 E Mason St Santa Barbara, CA 93101 Tel/Fax/Email: tel. 805-252-6777, johno@carbonconservation.com Audit Scope:The scope of the audit is a validation of the initial project design for a Reduction of Emissions from Deforestation (RED) project type. The validation will cover the Ulu Masen Project, which refers to the connected forest ecosystem and nearby forests of about 750,000 hectares located in the four northernmost Kabupaten of Aceh Province: Aceh Besar, Aceh Jaya, Aceh Barat, and Pidie. Climate, Community and Biodiversity Project Design Standards (Climate, Community and Biodiversity Alliance) - First Edition, May 2005 Other contacts for the project, representing the Government of Aceh and Fauna and Flora International are: The Provincial Government of Nanggroe Aceh Darussalam (Aceh)--Contact: Teuku Pasya Rafli, rafly@uninet.net.id, +62 (0) 817 175377 Fauna & Flora International--Contact: Graham Usher, graham.usher@ffi.or.id, +62 (0)812 669 0434
Standard used: Additional details:
  1.2. Audit findings  1.2.1 Analysis of Conformance with Standard  The CCB Standards are primarily project design standards and demonstrated conformance to the standard in this audit related to the planning, development, and design of the project in the inception or start-up phase. Conformance related to systems, design, and proposed activities in the process of development by the project. The standards were not used to measure project implementation, thus conformance to the standard was not meant to evaluate any delivery of emissions reductions, community or biodiversity benefits, or other results hoped to be achieved through future performance of the project. The CCB Standards were designed to be a tool to demonstrate high-
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quality project design that should lead to multiple-benefits in addition to carbon sequestration and emissions reductions. Use of the standards may increase confidence in forestry carbon projects.  CCB 'validation' is the process whereby an independent third party assesses the design of an afforestation/reforestation, forest management, or reduction of emissions from deforestation or degradation (REDD) project against all CCB Standards’ criteria. CCB 'verification' is the process whereby CCB projects are evaluated each five (5) years to determine whether the project is delivering net climate, community, and biodiversity benefits. It is important to aknowledge that the standard is intended to be applied up front in the design phase, often as a necessary assurance to catalyze financing, rather than to be used as a ‘verification’ standard that would verify and account for the carbon produced and other results achieved in the future.  The process of the pre-validation desk audit and the on-site field audit demonstrated an average level of compliance with the standards, although not complete compliance (see Appendix II below for full coverage of audit findings for all criteria and indicators). All 23 CCB Standards' criteria were evaluated in this audit.  The auditors determined that the project proponents had not fulfilled all indicators for the 15 mandatory CCB Standards' criteria. To reach their conclusion, the audit team reviewed the Project Design Document and supporting information and files prepared by the project proponents in support of the design. In addition, the auditors held several interviews with the managers, field staff, technicians, and workers of the partner organizations proposing this project, as well as with resource experts and some stakeholders.  The CCBA rules provide for three levels or tiers by which a project may be validated to the standards. These are:  • Approved: projects satisfying all fifteen mandatory criteria;  • Silver: projects that satisfy all fifteen mandatory criteria and receive at least 4 points with at least one point from optional criteria in each of the four sections (General, Climate, Community, and Biodiversity);  • Gold: projects that satisfy all fifteen manadatory criteria and receive at least 6 points, with at least one point from optional criteria in each of the four sections.  Within all criteria there are corresponding indicators evaluated through the audit. Indicators that were not met were considered 'non-conformances' with the standard. These are summarized and presented here in a scorecard of compliance. The following scorecard shows the level of compliance for the Ulu Masen project to the requirements of the CCB standards on December 17, 2007 (when the draft report was completed) and January 4, 2008 (when the final report was prepared). In order to receive the CCB validation from SmartWood, the project proponents had to address each of the corrective action requests issued on December 17th discussed in section as 1.2.2. below.   General Section Conformance Dec 17: Conformance Jan 4: G1. Original Conditions at Project Site Yes NoYes NoRequire d G2. Baseline Projections Yes NoYes NoRequire d
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Yes No Yes No Yes No Yes No Yes No Yes No
G3. Project Design & Goals G4. Management Capacity G5. Land Tenure G6. Legal Status G7. Adaptive Management for Sustainability G8. Knowledge Dissemination  Climate Section Conformance Dec 17: CL1. Net Positive Climate Impacts Yes No CL2. Offsite Climate Impacts Yes No (“Leakage”) CL3. Climate Impact Monitoring Yes No CL4. Adapting to Climate Change & Yes No Climate Variability CL5. Carbon Benefits Withheld from Yes No Regulatory Markets  Community Section Conformance Dec 17: CM1. Net Positive Community Yes No Impacts CM2. Offsite Community Impacts Yes No CM3. Community Impact Monitoring Yes No CM4. Capacity Building Yes No CM5. Best Practices in Community Yes No Involvement  Biodiversity Section Conformance Dec 17: B1. Net Positive Biodiversity Impacts Yes No B2. Offsite Biodiversity Impacts Yes No B3. Biodiversity Impact Monitoring Yes No B4. Native Species Use Yes No B5. Water & Soil Resource Yes No Enhancement  CCBA Validation Level Attained: Approved Yes SilverYes Gold Yes
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Yes NoRequire d Yes Noq ir Re u e d Yes NoRequire d Yes NoRequire d Yes NoOptional – 1 point Yes NoOptional   – 1 point Conformance Jan 4: Yes NoRequire d Yes NoRequire d Yes NoRequire d Yes NoOptional – 1 point Yes NoOptional   – 1 point Conformance Jan 4: Yes NoRequire d Yes NoRequire d Yes NoRequire d Yes NoOptional   – 1 point O tional Yes Nop – 1 point Conformance Jan 4: Yes NoRequire d Yes NoRequire d Yes NoRequire  d Yes NoOptional – 1 point Yes NoOptional – 1 point
 No  No  No
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  1.2.2 Corrective Action Requests and Observations   1.2.2.1 Corrective Action Requests  Based on the non-conformances identified above, the following corrective actions have been issued by SmartWood. See appendix I for a description of types and descriptions of corrective actions used by SmartWood.   CAR #:1/07 Reference Standard #:G2 (1) Non-conformance: [description of non-conformance]The PDDs of November 2 and December Major Minornot include a map with defined forest boundaries.13 did  Corrective Action Request:The PDD shall include a map with defined project boundaries.  Timeline for conformance:Prior to project validation Evidence to close CAR:of the December 29 PDD thatA new map (#2) was included in section 1.0 included the project boundary. CAR Status:CLOSED  CAR #:2/07 Reference Standard #:G2(4) Non-conformance: [description of non-conformance]The PDDs of November 2 and December 13 Major Minorfell short of describing the communities with socio-economic demographic or quantified information that would evidence a clearer starting point for communities in the project area and from that basis to enable evaluation of the benefits the project seeks to catalyze. Corrective Action Request:PDD shall include more complete description of the social economicThe condition of the local communities, particularly those adjacent to the forest, in each of the districts in the project area. Descriptions should reflect similarity or differences found in the five districts. These should include: - history and degrees of community involvement in logging and the contribution of timber and non-timber products to income; - degree of contribution of the main crops and/or main non-agricultural activities; - estimation of which crops or forest-based activities are likely to be increased in the coming years.  Timeline for conformance:Prior to project validation Evidence to close CAR:and 1.3.2 for “current conditions” regardingA revised section 1.3.1 additional variables describing the project area communities was prepared in the December 29 PDD. More complete description of the basic household livelihoods for different areas, including variations and differences was made. More quantitative data from studies on the degree of importance of the logging and small wood-processing sector was included. CLOSED
CAR Status:  
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CAR #:3/07 Reference Standard #:G2 (1) Non-conformance: [description of non-conformance]e November 2 and December 13 Th Major MinorPDDs' description of the methodology to assign percentages of forest predicted to be lost remained unclear. It was not sufficiently explained why other methods were not pursued, i.e., the reason for not using land cover loss observations from the past or recent past to set the rate. Nor was there a proposal for how the project may defend its probable baseline under different without project scenarios (low, moderate, or aggressive deforestation).  Corrective Action Request:The PDD shall describe the methodology used to build the deforestation rate from the land-class modeling and justify why other methods (i.e., based on observed land-cover change) were not used in favor of this approach, and propose alternative deforestation baseline scenarios.  Timeline for conformance:Prior to project validation Evidence to close CAR:2.1.5 was prepared in the December 29 PDD, whichA revised section provided a more thorough and defensible range of deforestation scenarios in the project area and rationale for the chosen deforestation rate and clearer explanation for how and when the project will improve the baseline. CAR Status:CLOSED  CAR #:4/07 Standard #: ReferenceG2 (1) Non-conformance: [description of non-conformance]The PDDs of November 2 and December Major Minor13 did not provide sufficient justification that 1.28% is the conservative rate for this project area. The conservatism emphasized in setting the carbon stocks would be questioned if the range of variability in the deforestation rate could run from .85 to 2.0%, or higher. Corrective Action Request:The PDD shall explain the methods and plan to refine (within the next two years) a deforestation baseline that includes the use of historic data of observed land-cover change.  Timeline for conformance:Prior to project validation Evidence to close CAR:A revised section 2.1.5 and 9 was prepared in the December 29 PDD, which provided a specific 18 month timeframe to improve upon the deforestation baseline following the latest methodologies. CAR Status:CLOSED  CAR #:5/07 Reference Standard #:G2(4) Non-conformance: [description of non-conformance]The scenario in the PDDs of November 2 Major Minor13 were absent some of the basic projections of area in differentand December habitat type that would likely be lost and some more detailed description of the ecosystems and species likely to be lost under the scenario. Corrective Action Request:The PDD shall include a more well-developed description (qualitative/quantitative) of the potential affects of the 'without project' scenario on biodiversity (habitat/some species).  Timeline for conformance:Prior to project validation Evidence to close CAR:2.4 was prepared in the December 29 PDD, whichA revised section provided more explanation of how the project addresses the limitations to calculating ‘biodiversity’ in the Ulu Masen ecosystem, yet indicated loss would be greatest in habitat from sea level to 1,000m. CAR Status:CLOSED  
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CAR #:6/07 Reference Standard #:G3(6) Non-conformance: [description of non-conformance]The description in the November 2 and Major Minorexplain the processes and efforts to includeDecember 13 PDDs did not clearly and reach out to individual forest peoples and a wider cross-section of village members. Corrective Action Request:The PDD shall give precise information on the main categories of local stakeholders, particularly community members, how they have been defined, and what are the mechanisms and guidance to be used during the project to allow their participation in the project decision making.   Timeline for conformance:Prior to project validation Evidence to close CAR:A revised section 7.1 was prepared in the December 29 PDD providing  more description of the categories of stakeholder groups, process for engagement, and guiding principles for consultation during the project. CAR Status:CLOSED   CAR #:7/07 Standard #: ReferenceG3(7) Non-conformance: [description of non-conformance]A Bahasa Indonesia version of the recent Major Minorversion of the PDD was not readily available. Corrective Action Request:The PDD shall be posted and readily accessible at the proponents websites in Bahasa Indonesia or English.  Timeline for conformance:Prior to project validation Evidence to close CAR:A draft Bahasa version is available on Provincial government’s website, http://www.nad.go.id/uploadims/. Section 3.6. of the PDD indicates that this will be regularly updated as the English version is updated. The proponents plan that as new versions of PDDs are released, they will be made available. CAR Status:CLOSED  CAR #:8/07 Reference Standard #:CM1(3) Non-conformance: [description of non-conformance]In the November 2 and December 13 Major MinorPDDs, the complaint mechanism was not described. Corrective Action Request:The PDD shall describe the development of the complaint mechanism.  Timeline for conformance:Prior to project validation Evidence to close CAR:A revised section 7.6 was prepared for the December 29 PDD, which described the process for handling grievances and complaints. CAR Status:CLOSED  CAR #:9/07 Standard #: ReferenceCM2(1) Non-conformance: [description of non-conformance]The November 2 and December 13 PDDs Major Minordid not anticipate negative impacts. Corrective Action Request:The PDD shall describe some of the potential impacts to communities who live offsite, such as those who work in the wood-based small-scale industries.  Timeline for conformance:Prior to project validation Evidence to close CAR:Revised sections 7.4 and 7.2.4 described offsite impacts and proposed project mitigation of these in the December 29 PDD. CAR Status:CLOSED
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 CAR #:10/07 Reference Standard #:B5(2) Non-conformance: [description of non-conformance]The November 2 and December 13 PDDs Major Minormeasures of improved water and soil resourcedid not set monitoring targets for quality. Corrective Action Request:The PPD shall describe planned studies to compare water or soil quality to the baseline.  Timeline for conformance:Prior to project validation Evidence to close CAR:8.3 and a new addition in section of 9.5 set monitoringA revised section targets and measures for soil and water in the December 29 PDD. CAR Status:CLOSED      1.2.2.1 Observations  The following observations were documented by SmartWood reflecting areas of minor weakness which merits attention by the Project proponent.  Observation Observation Reference Standard # # 1/07 The PDD should suggest quantitative methods to G2(2) determine / define intact and disturbed forest. 2/07 An annex to the PDD should list all relevant G2(5) government laws, decrees, and Qanun, which are important to the legal foundation for this project. 3/07 The PDD should consider a similar economic G2(3) valuation exercise as done in Leuser to design a more systematic baseline scenario for communities. 4/07 The PDD should elaborate strategies to mitigate a G3(5) wider range of possible negative community risks. 5/07 Project proponents should provide more detail on G4(1) detail on the staffing, expertise, infrastructure, resources, and roles of each organization, particularly to make clear which of these are at the local versus worldwide level. 6/07 The methodology should propose inclusion of CL3 measurement of coarse woody debris and understory vegetation carbon stocks during on-the-ground inventories if such stocks prove to be significant relative to aboveground total live tree carbon quantities (>10-15%).
   
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1.2.3 Actions Taken by Project Proponents Prior to Report Finalization  After the draft report was submitted to the project proponents on December 17, 2007, they revised and improved upon the sections within the earlier PDD version for which there were non-conformances. A new PDD and supporting excel spreadsheet with calculations was submitted to SmartWood on December 29, 2007. The actions taken by the proponents were to revise sections within this version of the PDD. SmartWood reviewed this document and has since indicated how revisions addressed CARs within section "1.2.2.1 Corrective Action Requests" and in "Appendix II Checklist". (Note that where the term "the PDD" is used without a specific date this means any prior versions of the PDD evaluated by SmartWood, which remain consistent with the current December 29, 2008 PDD.   1.3. Conclusions  Based on an evaluation of Project proponent’s management systems and performance in the field across the defined audit scope, the SmartWood Validation audit team concludes that Project proponent has:  Demonstrated full conformance with the standard  Demonstrated partial conformance with the standard. Corrective action requests (CARs) have been issued to address identified minor non-conformances.  Not demonstrated acceptable conformance with the standard. Preconditions have been issued to address identified major non-conformances. Additional conclusion: The project is both approved and validated to the SILVER CCBA level.
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2. VALIDATION AUDIT PROCESS Introduction The Ulu Masen project is proposed to reduce emissions from deforestation and forest degradation, whilst maintaining significant biodiversity values and enhancing community development opportunities through reinvestment of the proceeds from carbon sales and small scale extraction and development of community managed enterprises within forests approved for such purposes. There are approximately 750,000 hectares of forests within the project design area, the majority of this forest area, nearly 700,000 hectares are within the contiguous Ulu Masen ecosystem. This represents one of the largest contiguous blocks of tropical forest in Sumatra and connected with the adjacent Leuser ecosystem forests amount to about 3 million hectares. The forest areas within the project include: 428,757 hectares unprotected state forest lands which were allocated to natural forest concessions (HPH) for industrial scale logging, but are currently not active or operational; state forest lands allocated to commercial and community conversion logging licenses (HTI or HPK); and 310,991 state forest lands that are zoned in various classes of protected status, yet for which actual protection is weak and ineffective.  The project is formed by three parties working together, which are the Provincial government of Aceh, Fauna & Flora International, and Carbon Conservation Pty Ltd. The project proponents intend for the incentive of carbon financing to make possible community livelihood and forest protection strategies, as well as spatial planning reforms to land-use that will reduce the threats from illegal logging and forest conversion. The project is planned to begin January 1, 2008 and to be in a development phase from 2008 – 2012, prior to post-Kyoto frameworks. It is then scheduled to run for 25 years after 2012, until 2038. The initial phase builds off of the Aceh Forest Environment Project (AFEP), which is a multi-year, donor-funded conservation program managed by FFI and the biggest of its kind to an NGO in Southeast Asia. As AFEP is a foundation upon which the carbon project is to be developed, this SmartWood audit was primarily a review of the Project Design Document, but also took into consideration the AFEP grant proposal, performance indicators, work plan, and supervisory reviews. These were instrumental in understanding the project design and are referred to in the PDD.  The auditors acknowledge that Aceh presents difficult framework conditions to operate within and therefore substantially difficult and with considerable uncertainty, yet there is also an opening for progressive change quite unlike what has been done before within the forestry sector. The project is thus taking a calculated risk that the opportunities to succeed can be managed effectively. It is also the potential legal or tenurial challenges posed by different interpretations of Autonomy law for Aceh and the legitimacy/authority between Central and Provincial government that poses somewhat of a barrier to development of the project and for which it would deliver some additionality.  The project estimates roughly 140 million tons of carbon stocks at the beginning of the project. Depending upon the deforestation baseline and that deforestation which the project can effectively reduce the amount of carbon emissions that may be avoided were currently estimated by the project at around 100 million tons CO2e over 30 years, or roughly 3.3 million tCO2e per year.  The validation audit process did not verify any emissions reductions, nor does the Rainforest Alliance make any assurances of projected future emissions. Rainforest Alliance is not liable for decisions made based on the opinion of this validation.
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